The Texas Constitution of 1876 set aside half of Texas’ remaining public lands to establish a Permanent School Fund (PSF), to help finance public schools. Legislators intended for this land to be sold and the proceeds be deposited into the PSF. Deposits to the PSF would be an inexhaustible source of revenue because only interest income from the fund could be spent and would be apportioned among the state's public schools.
The Land Office is responsible for managing these lands, including sales, trades, leases and improvements, as well as administration of contracts, mineral royalty rates, and other transactions. These lands generate revenues primarily through oil and gas revenues, but also through land sales and leases for surface uses.
The interest earned on the PSF investments is distributed by the State Board of Education to every school district in Texas on a per-pupil basis. The land office also deposits fines on unpaid or late royalties, commercial leasing revenues, and Outer Continental Shelf pipeline fees into the PSF.
Since only interest income can be spent, the principal amount of the PSF remains intact and will continue to benefit the public schools of Texas.
Beginning in 2005, the Land Office was given the authority to invest in real estate using proceeds received from the sale of PSF lands and revenue from PSF mineral leases and royalties. Professional fund management firms oversee these funds on behalf of the Permanent School Fund.
Land Office involvement in the Permanent School Fund is managed by the School Land Board. Learn More